The contents of a read-only disk image can be directly accessed from the
Finder, but they cannot be modified. Read-only disk images support
licenses. They have internal checksums for use with the Verify Image…
command. In order to search a read-only disk image via Spotlight, use the
Mount Image… command and select the Shadow file option.

.dmg zlib — smaller file, faster

A disk image compressed using zlib. The file is relatively compact
and quick to access. This is DropDMG’s recommended format for general
use if your files need compatibility with macOS 10.10 or earlier.
DropDMG creates smaller zlib-compressed disk images than Disk Utility.
You can control the level of compression via the ZlibLevelesoteric
preference. Compatible with macOS 10.2 and later.

.dmg LZFSE — smaller file, fastest

A disk image compressed using LZFSE (Lempel-Ziv +
Finite State Entropy). The files are slightly smaller than
zlib-compressed disk images, with encoding that is twice as fast and
decoding that is three times as fast. This is DropDMG’s recommended
format for general use if your files can require macOS 10.11 or
later. Compatible with macOS 10.11 and later.

.dmg bzip2 — smallest file, slower

A disk image compressed using bzip2. Depending on the type of data
stored, this can be significantly smaller than a zlib-compressed disk
image. It is also slower to create and access. Compatible with macOS
10.4 and later.

.dmg — no compression

An uncompressed disk image will always be larger than a compressed one.
However, with certain types of content (music, photos, already
compressed files) the difference in size will be slight, and an
uncompressed disk image will generally be faster to create and access.
Compatible with macOS 10.2 and later.

Read-write Mac Disk Image

The contents of a read-write disk image can be directly accessed from the
Finder, and you can add, remove, and modify files. Read-write disk images
can be created from existing files/folders or by using the New Blank Disk
Image… command.

.sparsebundle — most efficient

Sparse bundle disk images appear as a single file but are actually
stored as a folder with many files inside. This makes it more efficient
to back them up using Time Machine or other backup utilities, as only
the changed parts need to be copied. Additionally, sparse bundle disk
images work well with the Compact Image… command. Compatible with
macOS 10.5 and later.

.sparseimage — more efficient

Sparse disk images are stored as a single file. This can make backups
inefficient for large disk images, because the entire file must be
copied each time. The Compact Image… command generally does not
reclaim as much disk space as with sparse bundle disk images. Compatible
with macOS 10.3 and later.

.dmg — constant file size

The disk image is stored as a single file. This is less efficient than a
sparse disk image because the file size is determined by the capacity
of the disk image rather than by the amount of data currently stored
on it. This can be desirable, for example if you want to reserve a
certain amount of space for the disk image’s use. Compatible with macOS
10.2 and later.

Cross-platform Archive

Archives make your files accessible to computers running other operating
systems (Windows, Linux, etc.). Archives are slower and require more disk
space than disk images, as they must first be expanded before the contents
are accessible in the Finder. DropDMG creates special archives that preserve
resource forks and Mac metadata. This extra information is ignored by other
operating systems.

.tar.gz — smaller file, faster

A tape archive, compressed using gzip. The file is relatively compact
and quick to create and expand. Compatible with macOS 10.4 and later.

.tar.bz2 — smaller file, faster

A tape archive, compressed using bzip2. Depending on the type of data
stored, this can be significantly smaller than a .tar.gz archive. It
is also slower to create and expand. Compatible with macOS 10.4 and
later.

.tar — no compression

An uncompressed archive will always be larger than a compressed one.
However, with certain types of content (music, photos, already
compressed files) the difference in size will be slight, and an
uncompressed archive will generally be faster to create and expand.
Compatible with macOS 10.4 and later.

.zip — smaller file, faster

A ZIP archive is similar to a .tar.gz archive except that this
format is more common on Windows. DropDMG creates smaller ZIP archives
than the Finder. ZIP archives do not preserve creation dates or Unix
ownership. Compatible with macOS 10.3 and later.

Cross-platform Disk Image

.cdr DVD/CD-R Master

A master disk image is an uncompressed, read-only disk image. If created
from a file or folder, it will have a Mac filesystem; if created from a
volume, the filesystem will be unchanged. This is mainly useful for
imaging an existing volume (e.g. copying a CD, DVD, or Blu-ray disc) or
creating a Mac disk image to burn using a non-Mac computer. Compatible
with macOS 10.0 and later.

A hybrid disk image is like a master. Additionally, the image contains
multiple filesystems so that the contents may be accessed using any
operating system. Mac-specific files such as .DS_Store are hidden
from the non-Mac filesystems. Compatible with macOS 10.0 and later.

Legacy NDIF Mac Disk Image

NDIF disk images are compatible with System 7, Mac OS 8–9, and macOS.
These can be useful for exchanging files with legacy Macs or for use with
emulators such as Sheepshaver and
Basilisk. NDIF disk image files use resource
forks, so some care must be taken in transferring them over the Internet.
They are also limited to 2 GB of logical size.

Note: Microsoft Windows also uses disk image files whose names end with
.img, but it does not read the NDIF format. To create a .img disk
image for Windows, tell DropDMG to use the .iso or .cdr format and
then rename the file to .img.